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To: JasonC
A further reality is that debt service is not a loss but about the most justified government expenditure imaginable, right up there with national defense, and practically everything else governments do is less defensible.

I'm not sure this is true. The world is teetering on the brink of massive default because the bond houses sold this crap to every government on Earth. If one borrows, its brilliant. If everyone borrows it's not... Look at California, many other states, Greece, etc... all in way above sustainable cash flow levels. All threatening to default and all a burden to future growth. Too much debt is NOT a justified government expenditure any more than drinking 10 bottles of a good 1986 Cabernet in any one sitting is a good idea. There is TOO MUCH debt in the system and it is possible to destroy the system with too much debt. Watch Greece and others who have defaulted...

100 posted on 04/12/2010 10:32:12 PM PDT by April Lexington (Study the constitution so you know what they are taking away!)
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To: April Lexington
Massive defaults by mainstreet deadbeats have already occurred and are peaking at this instant. Private sector debt service to income has already fallen hard from its peaks and is back to mid 1980s levels - walking away from $3 trillion owed kinda does that, and the stiffed bankers not signing up for another round of punishment does the rest.

There is nothing remotely unsustainable about government debt service either. They all have sufficient income to pay their debts many times over, most of them at very low rates. But populists and socialists think giveaways to half the population are a birthright and measure what can be "sustained" after make believe promises to themselves. They can't and they won't. But none of those things is a prior charge to debt service, and nothing but populist idiocy sustains the illusion that they are.

When governments have the support to vote high taxes as well as high spending they don't have this issue. But as soon as they can only remain in office by promising redistribution on the one hand and not actually following through with it on the tax side, on the other hand, debt service will climb as a portion of their expenditure. And that is just fine with me. It is undoing some of the ongoing robbery they are constantly attempting.

Would I rather have a macro economy in which the government takes only 10% of income, than one in which is takes 20% of income and returns 10% of it to private savers as debt service? Sure. But I'd rather have the second, than a government that takes 20% of income and gives all of it to deadbeats for nothing.

104 posted on 04/14/2010 2:22:28 AM PDT by JasonC
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